UK Power Networks sets out plans for a flexible, lower cost future for over 8.2m electricity customers

UK Power Networks has announced sweeping proposals that will help lower electricity costs for customers and open up new local energy markets.

As well as saving customers money UK Power Networks plans to supercharge the market for flexibility services and deliver a stronger, more resilient network by helping to reduce electricity demand during peak times. An earlier study by Imperial College London found that deploying flexible services could save customers across the UK £17bn - £40bn by 2050.

Today’s launch of a consultation on its Flexibility Roadmap, is a major step-change in the way the UK’s regional electricity networks operate, and could also see the creation of new markets for distributed energy resources, such as solar farms and battery storage. The proposals will make UK Power Networks the first of the UK’s six distribution networks to adopt a ‘flexibility first’ approach to delivering additional network capacity to the 8.2m homes, businesses, schools and hospitals it serves.

Until now providing additional capacity has required new cables and substations, but flexibility services will give UK Power Networks - already the UK’s lowest cost distribution network operator - the opportunity to take a more cost-effective approach.

By 2023, UK Power Networks estimates its market for flexibility could be over 200 MW, which could reduce peak demand for electricity on the distribution network by the equivalent of approximately 130,000 homes.

The move could also create new markets for distributed generation, such as wind and solar farms and electricity storage across London, the South East and East of England, to offer their resources to network operators. UK Power Networks believes that the increased competition will get more renewable energy onto the network at lower cost.

Flexibility services are when customers change their use or generation of electricity to balance demand on the network. For example, large-scale batteries can store renewable energy when demand on the network is low, and release it during the evening peak, or a major energy user like a factory can shift its operations to a time when there is lower demand on the network.

UK Power Networks will market test the viability of flexibility services ahead of traditional reinforcement designed to meet the growth in demand until 2023. The Flexibility Roadmap consultation document sets out how it will create new opportunities for flexible energy resources like renewable energy, in response to the rapidly changing, decentralised, decarbonised and digitised energy landscape.

Barry Hatton, Director of Asset Management at UK Power Networks, said: “We are not just talking about how we’ll manage the future of energy, we’re doing it right here and now. Our ambitious flexibility policy is going to drive value for our customers and create an important new market.

“The Flexibility Roadmap proposes a radical rethink to the way we do business, moving away from automatically building new assets and instead giving the distributed energy resources market the opportunity to offer their services.

“We strongly believe our role is to be a neutral facilitator of market-based solutions that provide the lowest cost option for our customers, not to prescribe them. Hence, we want to use open and transparent market mechanisms to procure the flexibility we need to manage our network. If the market can provide the capacity we need at a more cost-effective rate than building new infrastructure, that’s exactly what we will do.”

Flexibility has three key benefits to customers:• Lower electricity distribution costs: flexibility will allow UK Power Networks to defer capital expenditure to upgrade cabling and substations to help lower costs for consumers• New revenue opportunities for distributed energy resources: flexibility tenders will provide electricity generators, renewable energy, storage, major consumption users and aggregators a new way to offer their energy resource and create new income• A stronger network: flexibility will contribute to an even more resilient electricity supply by helping to reduce electricity demand during peak times on our network

In 2017 UK Power Networks successfully tendered for flexibility services and awarded a contract to Powervault, which intends to operate a “virtual power station”, supplying energy from batteries connected to people’s rooftop solar panels on their homes.

UK Power Networks was the first network operator to establish a standalone Smart Grid team in 2016. It has responded to feedback from distributed energy resources and is lowering barriers to make it easier for companies to take part in the flexibility process by investing in a new online energy marketplace.

The company is working with Piclo (formerly known as Open Utility) which operates the groundbreaking online platform Piclo Flex. The app matches energy providers’ resources with the network operator’s local need for flexible energy resources.

Flexible energy resources will be able to register and engage with an interactive map that matches providers with pinch-points on the network, places where UK Power Networks is seeking flexibility to add capacity.

The consultation will run from August to 8 October. If accepted the proposals will come into effect from 2019.